ENTREPRENEURIAL MOTIVATIONS TO START NEW BUSINESSES: A PANEL DATA ANALYSIS

Abstract

This paper explores the effects of attitudes on total early-stage entrepreneurial activity (TEA). The data is obtained from the Global Entrepreneurship Monitor’s Adult Population Surveys (APS) on the characteristics and motivations of individuals to start new businesses. The dataset consists, e.g., of individuals’ entrepreneurial intentions, their perceived capabilities, opportunities, and risks as well as the share of female-male entrepreneurs. The time-series for 16 European and Latin American countries together with Taiwan and Iran cover the research period 2011-2019. All countries with long enough time-series data are included. The research methodology tests Random and Fixed Effects Models. The latter model becomes selected leading to a model explaining 95% (R2 ) of the variation in TEA. The results of the rather heterogeneous sample of countries show that when individuals recognize their own capabilities to start and run businesses, they also have entrepreneurial intentions, which both have great significant positive effects on the early-stage entrepreneurial activity. Interestingly, fear of failure, which may prevent individuals to start a business, had also positive effects on TEA. This suggests that fear of failure goes hand-in-hand with the willingness to start new businesses. Further, testing the predictive power of the obtained Fixed Effects Model demonstrated it highly accurate. For future research, countries may be clustered by their attitudes and entrepreneurial conditions, which were not considered in this study, when timeseries analysis may reveal different set of indicators driving entrepreneurship, e.g., in Europe and Latin America.